US-based Voyager Digital is preparing to face litigation over its crypto yield product. The lawsuit is regarding allegations that Voyager Digital has been selling unregistered securities in its Earn program. This is the latest in a line of crypto platforms to face charges over providing yield to retail investors.
So far it has been the SEC that has wielded the stick on crypto platforms that have had the temerity to provide yield to their retail customers. This time though, two lawyers filed a complaint on behalf of their client, Florida resident Mark Cassidy, alleging that Voyager Digital charged hidden fees and made promises it couldn’t keep.
The Voyager Digital Earn program enables customers to ‘stack’ yield on more than 40 digital assets. The customers earn rewards depending on how much crypto they have in the program. The highest tier in the program yields 12% APY, while holding the USDC stablecoin offers a yield of 9% APY.
In September of last year Coinbase, which had taken up the SEC’s offer to come in and work with it, was straightaway hit with the threat of legal action, after Coinbase showed the regulator its plans to launch a lending program.
Since that time Blockfi has had to pay a massive $100 million fine to the SEC after the regulator declared that Blockfi’s lending products were securities.
More recently, Celsius customers were targeted by the SEC, and the company was ordered to stop allowing its US-based customers to earn rewards on their crypto. However, all US accredited investors were allowed to continue to earn yield on their crypto as before.
Voyager has also been hit with cease and desist orders from the state securities divisions of Kentucky, Indiana, New Jersey, and Oklahoma, for allowing residents of those areas to earn yield on the cryptocurrencies they hold on the platform.
Voyager has responded to the orders, saying:
“Voyager is in ongoing communications with these state regulators to better understand the terms in their respective regulatory orders and to clarify certain statements in the orders that Voyager believes are inaccurate,”
It is truly a sign of our times, that when cryptocurrency platforms provide their customers with yield that the banks and other traditional financial platforms could only dream of, that the SEC, so called protector of the retail investor, should pursue them with such vehemence.
Yes, regulations should be put in place that are fair and that promote innovation while offering protection to all parties at the same time. However, to just concentrate on cutting the retail investor out of any product that offers a decent yield is heavy-handed and totally unfair. The cryptocurrency sector grew out of a need to help the common investor and save them from a financial system that serves nobody but those at the top of the chain - namely the banks.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.